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| Also in 2024, we expect to generate earnings growth from our recently renovated properties, some of which have already started to see notable share gains in the months coming of renovation |
| At the adult pool, which was completed in mid-January, the new bar, now known as H2 Oasis, is meeting with significant positive feedback in part due to revised menu overseen by the renounced celebrity chef, Richard Blais, with whom we’ve developed an excellent working relationship at Park Hyatt Aviara, Hyatt Regency Grand Cypress and Hyatt Centric Key West |
| And better than this outlook are opportunities for further occupancy gains |
| With no debt maturities until August of 2025, all of our debt at fixed interest rates at present, no preferred equity and 29 of our 32 hotels unencumbered of property level debt, our balance sheet continues to be strong |
| Our 2023 RevPAR increase was driven by a healthy 250 basis point occupancy gain as average daily rate was essentially flat |
| EBITDA margin improved by over 170 basis points in 2023 as compared to 2022 |
| As to our balance sheet, we are well positioned to take advantage of opportunities given our liquidity and balance sheet profile |
| I think we’re seeing some really good results there on the group side |
| In addition, our properties in San Francisco, Santa Clara and Nashville all achieved double-digit RevPAR growth for the year |
| We are pleased with this result given the inflationary pressures on the overall economy and our industry particularly during the year |
| Clearly, the way we are looking at this renovation is it’s going to give us very significant upside over both what we kind of view as a true kind of stabilized number and even some of the frothy years that we have seen over the last couple of years in the market |
| Fourth and last, strong growth from three of our smaller properties which were under renovation in 2023 |
| At W Nashville, RevPAR grew by over 10% for the full year with 33% growth in group revenue as our business strategy for this hotel continues to become more refined |
| We also saw continued strength in business transient demand over the year as evidenced by a healthy recovery in midweek occupancy |
| And finally, leisure demand continued to normalize, which was not a big surprise given the incredible strength in domestic leisure demand coming out of the pandemic |
| This transformative renovation has completely changed the look and feel of the property and will afford the hotel with the ability to maintain its market-leading position within the downtown Orlando market |
| We continue to believe strongly that the property will be able to compete even more effectively in the Phoenix, Scottsdale luxury resort markets after its relaunch as the luxury Grand Hyatt Resort Scottsdale by the end of the year |
| We also believe the annual expense growth relative to revenue growth will continue to moderate over the quarters and years, and that should lead to renewed margin growth |
| Our fourth quarter and full year 2023 margins reflected generally good expense control over the year in light of significant increases in wages and benefits as well as utility costs |
| This gives us confidence that we will see further opportunities for growth over the coming year, particularly at our important group-oriented hotels in Orlando, Portland, Atlanta and Dallas as we see booking windows lengthen and normalize |
| As we look ahead, we believe the investments we are making this year and have made in – over the last few years, continued ramp in Nashville and Portland, significant recovery potential in Northern California and low rooms-weighted supply growth should lead to higher levels of RevPAR growth in the years ahead |
| We are pleased to report on our results and achievements in 2023 as we successfully executed against our long-term strategy by further investing in our high-quality and diversified portfolio while remaining focused on working with our operating partners to drive top line growth and control expenses in a challenging operating environment |
| We believe that our recent capital projects will enable us to capture significant revenue and income growth in the years to come |
| In addition to growth from recently renovated properties, our greatest opportunities for growth in 2024 include continued strong performance at our hotels that cater to group and business transient customers |
| This includes our 2 most recent acquisitions, W Nashville and Hyatt Regency Portland at the Oregon Convention Center, both of which should generate above-average levels of RevPAR growth as compared to our overall portfolio |
| Additionally, in 2024, we expect strong RevPAR growth at our properties in Orlando, Atlanta and our recovering Northern California markets, San Francisco and San Jose |
| We also anticipate continued recovery in business transient demand, which should drive further midweek occupancy gains |
| Our performance reflected very strong group results in October, particularly at our properties in Houston, Atlanta and Orlando and generally higher group rates across the portfolio |
| Our properties achieving the strongest RevPAR growth as compared to full year 2022, including the Hyatt Regency Portland with RevPAR of 30.8%; our 3 Houston properties with RevPAR up 19.9%; and our 2 Dallas properties, which are up 17.9%, all of which benefited from recovering business transient and strong group demand |
| When including Hyatt Regency Scottsdale, which delivered extremely strong results in early 2023 due to the Super Bowl and strong overall demand in the markets, quarter-to-date RevPAR through February 22 is down 0.5% |
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| On a same-property basis, fourth quarter hotel EBITDA of $63.7 million was 8.4% below 2022 levels and hotel EBITDA margin decreased 162 basis points |
| Fourth quarter same-property hotel EBITDA was $63.7 million, a decrease of 8.4% compared to the fourth quarter of 2022, resulting in 162 basis points of margin erosion |
| Our same-property RevPAR for the fourth quarter decreased 3.4% as compared to 2022 |
| On a full year basis, same-property hotel EBITDA was $271.5 million, and margins decreased 153 basis points |
| This retracement was evident in the lagging performance of some of our more leisure-dependent assets and markets in the fourth quarter |
| Same-property portfolio RevPAR decreased 3.4% a quarter as compared to the same period in 2022 |
| On the leisure side, several of our more leisure-oriented properties reported RevPAR declines in the fourth quarter and full year 2023 is compared to 2022, including our properties in Key West, Napa, Savannah and Santa Barbara |
| Same-property portfolio RevPAR for full year 2023 increased 3.9% compared to 2022, just shy of the low end of our most recent guidance as November and December RevPAR were a bit softer than expected |
| On a same-property basis, 2023 hotel EBITDA of $271.5 million was 1.5% below 2022 levels and margins were 153 basis points lower as compared to 2022 |
| In the quarter, same-property RevPAR in October and November declined 2.2% and 3.7%, respectively, as compared to 2022, while December RevPAR decreased 4.9% compared to 2022 |
| Although RevPAR declined in the fourth quarter, this was expected as the overall market was impacted by the absorption of 3 new luxury hotels year-over-year during this traditionally softer period |
| Conversely, occupancy on Saturday nights declined relative to the fourth quarter of 2022, reflecting softening leisure demand across the portfolio and the extreme peaks we experienced in 2022 |
| The RevPAR declines at Andaz Napa and Hyatt Centric Key West reflected weaker leisure demand against an extremely tough prior year comparison, although both properties’ RevPAR was above 2019 levels |
| Excluding Hyatt Regency Scottsdale, same-property hotel EBITDA margins decreased 92 basis points as compared to full year 2022 |
| Excluding the impact of Scottsdale, we expect full year margins to decrease about 40 basis points, which reflects a first half decline of about 100 basis points and flat margins in the second half |
| And you saw some of that in the fourth quarter, where RevPAR declined a bit as a result of the absorption of some of those newer luxury hotels that came online |
| As to hotel EBITDA margins for the year, we expect margins to decline about 100 basis points as compared to 2023 |
| While Barry will provide more detail on our capital projects, I would like to note that we expect overall renovation disruption in the portfolio to be a bit less than in 2023 despite continued significant renovation disruption at Hyatt Regency Scottsdale |
| We have got some issues this year between Q3 and Q4 on the group side as it relates to the Jewish holidays |
| This weighting varies from the cadence of earnings in prior years due to tougher comps in some markets in the first couple of quarters, including Scottsdale, as well as renovation disruption, which is much greater in this year’s first half than last year’s first half |
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